Investing.com -- Shares of AppLovin (NASDAQ: NASDAQ: APP ) have tumbled 3% following a scathing short report by Fuzzy Panda Research, which accuses the mobile ad-tech company of engaging in "Ad Fraud" and other dubious practices. The report alleges that AppLovin's success, particularly with its machine-learning algorithm Axon 2.0, may be the result of unethical and potentially illegal activities, including data theft from Meta Platforms Inc (NASDAQ: META ). and violations of app store policies set by Apple (NASDAQ: AAPL ) and Google (NASDAQ: GOOGL ).

According to Fuzzy Panda Research, AppLovin's expansion into e-commerce is marred by tactics that include "reverse engineering" Meta's data and exploiting consumer data in ways that breach the terms of service of major app stores. The report suggests that AppLovin's high click-through rates (CTRs) and revenue growth could be attributed to these deceptive strategies, rather than legitimate business practices.

The report by Fuzzy Panda Research comes on the heels of previous scrutiny from other short sellers, including Bear Cave, who have targeted AppLovin in the past. The allegations have cast a shadow over the company's previously lauded financial performance and have raised serious concerns about the legitimacy of its business operations.

While the company and its CEO, Adam Foroughi, have been praised for remarkable growth, the report suggests that the underpinnings of this success may be under threat if major technology firms such as Apple, Google, and Meta take action against the alleged malpractices.

Investors have reacted to the news with caution, reflected in the stock's decline. The broader implications for AppLovin's business model and future revenue streams remain to be seen as the market processes the potential impact of these allegations.

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